Early bumps?

A BUMPY ROAD? Donald Trump was elected president eight days ago, a result that gave a jolt to previously stalled GOP efforts to comprehensively revamp the tax code. And yet it seems it might have only taken about a week for cracks to start forming in the partnership between Hill Republicans and the president-elect.

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Here’s what happened on Tuesday: Stephen Moore of The Heritage Foundation, who’s been one of the top Trump surrogates on tax issues for months, pitched to lawmakers at a meeting arranged by House Majority Whip Steve Scalise on a one-time 10 percent tax on offshore corporate income to help offset the cost of new infrastructure spending.

Moore suggested that could raise “as much as $100 billion to $150 billion,” according to the Pro Financial Services team’s Colin Wilhelm, and that marrying tax reform and infrastructure was “a potential way to get Democrats to buy into the jobs program.” (The most recent projections found there’s about $2.6 trillion in corporate profits abroad.)

Rep. French Hill (R-Ark.) told Colin that the meeting started to merge the ideas of the Trump team — which has been advised by supply-side acolytes like Moore, Larry Kudlow and Art Laffer — and Speaker Paul Ryan and House Ways and Means Chairman Kevin Brady.

Yet here’s the thing. Right around that time, Brady was also making it pretty clear that he has no interest in using offshore income to offset any infrastructure program. Instead, he wants to use that pile of cash to help pay for lower rates. "I have not seen the details of the package being developed by the Trump administration — I think it's under construction as we speak right now and so we'll have that discussion,” Brady said at an event sponsored by Bloomberg BNA and KPMG, via our Brian Faler.

Rep. Dave Reichert (R-Wash.), another senior Ways and Means member, said today would be the first real chance for GOP tax writers to sit down and discuss any tax reform issues since returning to Washington. But Reichert, like Brady, also didn’t sound enthused about bringing infrastructure back into the mix on tax reform.

“I look at this as an opportunity to sort of educate the new administration on some of the things we’ve been working on,” Reichert said. He added that GOP lawmakers would certainly listen to a Trump pitch on infrastructure, but “then also take a look at how that might impact and affect all the efforts that we’ve already put forth in trying to reform the tax code.”

WELCOME TO WEDNESDAY, where it’s fair to say that House Republicans are more optimistic about tax reform than U.S. soccer fans are about the direction of the national team. Speaking of valleys: It’s also been 26 years since Milli Vanilli had to give up their Grammy.

BACK TO REPAT, ROADS AND REFORM: All of the above seems to raise some pretty interesting questions about how the tax reform debate would proceed. If their new president really wanted to use repatriation to pay for roads, bridges and airports, how much of a fight could House Republicans really put up? On the flip side, who knows more about maneuvering around Washington — veteran lawmakers or the outsider president?

There also seems to be a related disconnect brewing over reconciliation. Moore’s discussion of wooing Democrats suggests that the Trump team doesn’t see tax reform through reconciliation as a slam dunk. (Infrastructure spending would also seem to be about as good a way as any to court Democrats on tax reform.) But as Pro Budget and Appropriations’ Ben Weyl reported Tuesday night, Senate Budget Chairman Mike Enzi — not exactly an excitable guy — is all about getting two reconciliation bills done next year, which would give Congress a shot at tax reform without needing any Democratic votes at all.

To be fair, Moore did say after Tuesday’s meeting with House Republicans that using tax reform to pay for infrastructure “is just something that’s been considered.” But all in all, this whole thread is a long-winded way to flesh out an example of the point CNN’s Jeanne Sahadi made — tax reform’s easy to want, but the details are hard. Another potential complication: Brady also said Tuesday that Republicans want to make tax reform deficit-neutral, though with the help of dynamic scoring.

AND WHAT ABOUT CORPORATE INTEGRATION? The good news, also from Brian. Mark Prater, the chief tax counsel for Senate Finance Republicans, said Chairman Orrin Hatch’s long-awaited corporate integration plan is almost done. Prater, also speaking at that BNA and KPMG event, said the plan wouldn’t add to the deficit or alter the current income distribution.

But Hatch also hasn’t said whether he’d make his draft public, Prater added. That raises yet some more questions about how tax reform negotiations will proceed. Hatch started plugging away on corporate integration when it looked like Hillary Clinton was likely to be president — in other words, when there wasn’t as much Republican ambition surrounding tax reform.

WHAT’S NEXT AT THE IRS? Understandably, there’s been some wondering about whether IRS Commissioner John Koskinen — whose term expires next November — would stick around under President Donald Trump. But first things first: Koskinen told Morning Tax and other reporters on Tuesday that the Trump transition team hasn’t met with current Treasury and IRS officials yet. The IRS chief added that his biggest concern is urging the Trump administration to have a commissioner nominated by mid-spring, so there’s someone confirmed and ready to take over by November 2017.

SOME IRS POLICY NOTES: Koskinen spoke to reporters after addressing an American Institute of CPAs conference, where he won some murmurs of approval for noting that he didn’t expect any tax extenders drama to delay the tax filing season early next year. (There will, at the least, likely be some discussion over energy extenders in the next few weeks, but those provisions expire at the end of this year and thus won’t affect the start of next year’s filing season.)

The commissioner also rolled his eyes about new audit rules for partnerships that were enacted as part of a 2015 budget deal. His issue with them: They don’t work, though he had hoped the new rules “would allow the audit to be more efficient, both for the taxpayer and for us.”

“Unfortunately, the statute when it was passed, it was done at the last minute as a pay-for,” Koskinen added. “Nobody quite asked: ‘Hey, would this really work?’ So we’ve been spending a lot of time trying to sort through whether we’re better off or not.”

INTERNATIONAL UPDATE —

STIGLITZ SPEAKS: Publicly listing the beneficial owners of trusts would help tamp down both tax evasion and money laundering, according to a new report co-authored by Joseph Stiglitz, the Nobel laureate economist. This year’s Panama Papers illustrated the depth of global tax evasion, POLITICO Europe's Bjarke Smith-Meyer reports. “Those taking advantage of the web of corporations to hide illicit activities know that both the resources of enforcement agencies and their commitment to full transparency are limited,” said the report from Stiglitz and Mark Pieth of the Organization for Economic Cooperation and Development.

IT’S COME TO THIS: The Associated Press reports that India will start marking the fingers of people swapping bills at banks, “as authorities struggle to deal with the bedlam caused by the sudden demonetizing of the country's highest-denomination bills.” In an effort to battle tax evasion, New Delhi has decided to remove the 500 and 1,000 rupee notes. People in the country are allowed a onetime swap of bills, but it’s difficult for banks to make sure people aren’t engaging in multiple swaps.

STATE NEWS —

A SENATORIAL OVERLORD: Former Sen. Jeff Chiesa of New Jersey, an ally of Gov. Chris Christie who served a few months in the Senate back in 2013, will now oversee the state’s takeover of Atlantic City, The Associated Press reports. The takeover gives the state wide latitude over the city’s operations, after Atlantic City has seen its property tax crumble with the closure of five casinos.

Authors:

About The Author

Bernie Becker is a tax reporter for POLITICO Pro, where he is primarily responsible for writing the Morning Tax tipsheet.

He previously covered taxes for The Hill, and was an editorial assistant for The New York Times in Washington.

A native of Martinsville, Va., Becker has degrees from the College of William and Mary and the University of Maryland. He now lives in Northwest D.C. with his wife and young daughter. His hobbies include running, reading history books, eating spicy food and watching his daughter chase his cat.